UK-Norway Fisheries Deal Boosts Pound to Rand Rates
Dovish comments from BoE’s Saunders Send GBPUSD Lower
The Pound to Rand exchange rate is trading higher today after two days of losses, following the strengthening of the sentiment on the British Pound this Thursday. The Pound Sterling is off intraday lows of 21.26923 after Norway and Britain reached a bilateral trade agreement on fisheries.
This agreement is considered a significant boost to the UK’s quest to seek new trade partners and new deals ahead of its end-of-the-year exit from the European Union’s common market. Norway is not part of the EU’s common market, which allows it to negotiate a trade deal separately with the UK.
The GBPZAR is trading at 21.16573 as at the time of writing. However, the Pound to Rand rate remains lower by 1.6% this week due to earlier pressure on the Sterling.
Technical Outlook for GBPZAR
The Pound to Rand price action on the weekly chart is my focus here. Price action has thrown up some exciting stuff. First, the lower highs are evident on the chart, and these are starting to push against the static lows on the 50% Fibonacci retracement level at 20.97316. This week’s price action has found a range that is capped at the 22.05446 resistance, where the previous low of 24 August resides. Presently, price is resting on the 38.2% Fibonacci level.
The borders of the triangle as well as the various Fibonacci retracement levels, could be the price levels that decide price action. A bounce from the present support provided by the 38.2% Fibonacci price level at 21.61131 provides an impetus for the GBPZAR to head towards the 22.05446 resistance as the initial target, with 22.40090 presenting itself as potential future resistance. This is where the triangle’s descending border is expected to interact with the horizontal price level to reinforce this resistance. If the price action continues to move towards the 23.35124 resistance, this move negates the pattern.
On the flip side, a breakdown of current support supports a measured move towards the 78.6% Fibonacci retracement level. This move would need to take out 20.97316 and 20.33500 before attaining this target. Further decline to 18.83661 can be considered a bonus within the current price context.